The New Zealand dollar eased back today from a US66.15c overnight high and held steady during the day as the market took a breather.
It ended the local session today on US65.87c, virtually unchanged from its opening and yesterday's close.
Yesterday, the kiwi ended stronger after a volatile session in the wake of an NZIER quarterly survey of business confidence that indicated a greater chance of an official interest rate rise this year.
ANZ bank said the business confidence survey had turned recent sentiment completely around as capacity utilisation numbers at near record levels spelt higher local interest rates across the curve.
ANZ believes the Reserve Bank is likely to raise interest rates this month as a late cycle insurance against inflation risks.
Expectations of a rate rise saw the NZ dollar driven higher by yield demand, which had put a floor under the kiwi of US65.30c, but it also struggled to climb today.
Against other currencies it was also steady. By 5pm the NZ dollar was buying A88.54c from A88.45c at 5pm yesterday, 0.5254 euro from 0.5232, and 78.83 yen from 78.55. The trade weighted index was at 66.84 from 66.70.
The US dollar struck a 10-month high against the yen and a 5-1/2-month peak versus the Swiss franc as the market came round to the view that the Federal Reserve was in no rush to cut interest rates.
A catalyst for the dollar's strength in the wake of upward revisions to past US payrolls data at the end of last week has been a growing view that the US economy may not be as weak as earlier thought, coupled with an eagerness to break the dollar out of ranges.
The dollar was at 1.2700 Swiss francs after rising as far as 1.2718 francs.
The euro hovered around US$1.2540 after falling to US$1.2518 a day earlier, the lowest since mid-July.
Reuters currency rates:
5pm today 5pm Tuesday
NZ dlr/US dlr US65.87c US65.88c
NZ dlr/Aust dlr A88.54c A88.45c
NZ dlr/euro 0.5254 0.5232
NZ dlr/yen 78.83 78.55
NZ dlr/stg 35.52p 35.30p
NZ TWI 66.84 66.70
Australian dollar US74.38c US74.47c
Euro/US dollar 1.2539 1.2587
US dollar/yen 119.65 119.22
- NZPA
<i>Currency:</i> NZ dollar steady as market takes breather
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